Kashagan consortium: delays mean longer contracts or missed targets.

FT: “The oil companies behind the $50bn Kashagan oil project in the Caspian Sea will not be able to raise production to a million or more barrels a day as planned unless they can extend the life of the contract, a person familiar with the project said.” “The current production-sharing contract expires in 2041, but huge delays to the start-up of the field, the largest outside the Middle East, mean the companies will have much less time to recover their costs than initially anticipated.
“The [Kazakh] government understand that the consortium would need an extension of the contract to put additional investment in the project,” the person said. However, such a process would probably involve years of hard bargaining with the authorities in Astana, the capital.
He was speaking a week after Kazakh ministers confirmed to the FT that start-up of Kashagan, already billions over budget and way behind schedule, will be delayed by as much as two years while 200km of pipeline is replaced.
It is the latest in a series of setbacks for the field, which was supposed to start producing nine years ago but has been plagued by delays and cost overruns.
Discovered in 2000, Kashagan was the world’s largest oil find in 30 years. The consortium developing the field, which includes ExxonMobil, Royal Dutch Shell, Total SA, Eni and CNPC of China, had planned to ramp up output to 1.5m b/d, which would have turned Kazakhstan into one of the world’s largest oil producers.
….Kashagan briefly started producing oil in September last year, only to shut down a few weeks later due to a leak in a gas pipeline connecting the oilfield to the shore.”